Indian state's success not Modi's alone

Indian state's success not Modi's alone

The talk is of change and of a Modi hawa or wave that will sweep across India and the Congress government out of office when the results of the country's general election are out in the middle of next month.

By most pollster estimates, the Bharatiya Janata Party (BJP) is poised for a clear victory, and much credit for its resurgence is given to Gujarat Chief Minister Narendra Modi, its standard-bearer and the man most likely to be the next prime minister of India.

Mr Modi's appeal can be summed up in a story that has become famous. In 2008, minutes after Indian tycoon Ratan Tata abandoned his two-year effort to build the world's cheapest car in West Bengal following large-scale local protests, he received a one- word SMS from Mr Modi. "Suswagatham," it read, which means "welcome" in Sanskrit.

Fourteen months later, the first Tata Nano car rolled out of its Gujarat factory.

Mr Modi's national campaign plays on his achievements running Gujarat since he became chief minister in 2001.

In those 12 years, the state's gross domestic product (GDP) has expanded 9.9 per cent annually on average, up from 6.3 per cent previously. Gujarat's per capita income almost quadrupled from 2002 to last year. It has 5 per cent of India's population, but contributes 8 per cent of the total domestic output of all its states.

"NaMo" - as he is sometimes called - has promised to replicate the "Gujarat model" of industrial development and growth throughout India if he wins the election. "If Gujarat can, so can India", it says prominently on his personal website.

It is a powerful message for Indians fed up with a weakening economy under a lacklustre Congress government.

But amid great expectations over what "Modinomics" can do for India, it is worth noting that Gujarat's achievements are not Mr Modi's alone.

If one examines its past, as some Indian scholars have, there is evidence that Gujarat has historical advantages over other states which made economic success easier.

To start with, Gujarat was part of the Bombay Presidency that was under the direct rule of the British during the colonial era, when most other princely states were under indirect rule. The three "presidencies" - Bombay, Madras and Bengal - were the main centres of power for the British, and experienced early economic development and industrialisation.

A capitalist class thus emerged early in Gujarat and came to dominate politics as well. The Patidar caste were major landowners in rural areas, while the Banias and Brahmins had commercial, industrial and political power in the cities. Key politicians emerged from these three castes, and over time led to the intertwining of the political and economic elite.

Coupled with tame trade unions, the state government was primed to pursue pro-industrial and pro-business policies after independence. From 1960 to 1980, Gujarat grew from the eighth to second most industrialised state in India.

Gujarat's business-friendly leadership encouraged the growth of industralisation. It was also aided by a capable bureaucracy that emerged as early as the 1960s.

Business licences then were tightly controlled by the federal government, but Gujarat's bureaucrats and politicians knew their way around the federal central planners.

The state placed its best people in agencies most relevant to growth, such as finance and industry, and they were quick to use their network of key Ministry of Industry officials in New Delhi to gather information on future projects and expedite the approval of licences.

In 1977, Gujarat started a one- stop centre that coordinated the work of various state agencies, to help businesses set up more easily in the state.

The skills and experience acquired remained a boon to Gujarat even after 1991, when the federal government abolished the central licensing system and state governments were given more leeway to pursue their own investment policies.

To look at it from a different perspective, let us compare the development of West Bengal with Gujarat, as some scholars like Atul Kohli, professor of international affairs at Princeton University, have done and drawn some telling conclusions.

During independence, half of West Bengal's population comprised Muslims and lower castes and tribes, who were generally poor and illiterate. Educated Bengalis who made up the political elite generally stayed away from business. The void was filled by migrants from other regions.

So unlike Gujarat, a close-knit ruling alliance between the political and economic elites never materialised. Instead, the restive peasants and industrial workers supported left-leaning parties, culminating in the Communist Party of India's victory in 1977.

But as it won on the back of a confrontational stance towards the central Congress government, the party never fostered ties with central officials the way Gujarat did. To please supporters, it prioritised land reform, and favoured cottage and small industries over multinational corporations.

By the time West Bengal tried to pursue an industrial policy in the 1990s, systemic and institutional weaknesses made progress hard - a situation highlighted by the cancelled Nano project.

Mr Modi's SMS shows him to be an astute politician, swift to size up opportunities and decisive in his actions. But it is also clear that Gujarat's growth is a confluence of many factors and not merely the effort of one man.

"While Gujarat's overall economic record has been undoubtedly good over the past three decades, its recent performance does not seem to justify the wild euphoria and exuberant optimism about Modi's economic leadership," wrote British-based Indian academics Maitreesh Ghatak and Sanchari Roy in an article in The Guardian last month.

In fact, while Gujarat's GDP grew under Mr Modi, the state's share of India's total GDP has remained relatively stable, at about 7 per cent to 8 per cent.

And if inherent demographic, political and institutional differences have led India's states to where they are today, one might also question the viability of simply transplanting a successful formula from one state to another.

Yes, Gujarat can, but one should not immediately assume that Mr Modi can do the same for the whole of India.

chengwee@sph.com.sg

This article was published on April 22 in The Straits Times.

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